Not
surprisingly, the swift unraveling of the global economy combined
with the ascent to the U.S. presidency of an African-American liberal
has left millions anticipating that the world is on the threshold
of a new era. Some of President-elect Barack Obama’s new appointees
– in particular ex-Treasury Secretary Larry Summers to lead
the National Economic Council, New York Federal Reserve Board chief
Tim Geithner to head Treasury, and former Dallas Mayor Ron Kirk to
serve as trade representative – have certainly elicited some
skepticism. But the sense that the old neoliberal formulas are thoroughly
discredited have convinced many that the new Democratic leadership
in the world’s biggest economy will break with the market fundamentalist
policies that have reigned since the early 1980s.

One important
question, of course, is how decisive and definitive the break with
neoliberalism will be. Other questions, however, go to the heart of
capitalism itself. Will government ownership, intervention, and control
be exercised simply to stabilize capitalism, after which control will
be given back to the corporate elites? Are we going to see a second
round of Keynesian capitalism, where the state and corporate elites
along with labor work out a partnership based on industrial policy,
growth, and high wages – though with a green dimension this
time around? Or will we witness the beginnings of fundamental shifts
in the ownership and control of the economy in a more popular direction?
There are limits to reform in the system of global capitalism, but
at no other time in the last half century have those limits seemed
more fluid.

President
Nicolas Sarkozy of France has already staked out one position. Declaring
that “laissez-faire capitalism is dead,” he has created
a strategic investment fund of 20 billion euros to promote technological
innovation, keep advanced industries in French hands, and save jobs.
“The day we don’t build trains, airplanes, automobiles,
and ships, what will be left of the French economy?” he recently
asked rhetorically. “Memories. I will not make France a simple
tourist reserve.” This kind of aggressive industrial policy
aimed partly at winning over the country’s traditional white
working class can go hand-in-hand with the exclusionary anti-immigrant
policies with which the French president has been associated.
Global Social Democracy

A new national
Keynesianism along Sarkozyan lines, however, is not the only alternative
available to global elites. Given the need for global legitimacy to
promote their interests in a world where the balance of power is shifting
towards the South, western elites might find more attractive an offshoot
of European Social Democracy and New Deal liberalism that one might
call “Global Social Democracy” or GSD.

Even before
the full unfolding of the financial crisis, partisans of GSD had already
been positioning it as alternative to neoliberal globalization in
response to the stresses and strains being provoked by the latter.
One personality associated with it is British Prime Minister Gordon
Brown, who led the European response to the financial meltdown via
the partial nationalization of the banks. Widely regarded as the godfather
of the “Make Poverty History” campaign in the United Kingdom,
Brown, while he was still the British chancellor, proposed what he
called an “alliance capitalism” between market and state
institutions that would reproduce at the global stage what he said
Franklin Roosevelt did for the national economy: “securing the
benefits of the market while taming its excesses.” This must
be a system, continued Brown, that “captures the full benefits
of global markets and capital flows, minimizes the risk of disruption,
maximizes opportunity for all, and lifts up the most vulnerable –
in short, the restoration in the international economy of public purpose
and high ideals.”

Joining
Brown in articulating the Global Social Democratic discourse has been
a diverse group consisting of, among others, the economist Jeffrey
Sachs, George Soros, former UN Secretary General Kofi Annan, the sociologist
David Held, Nobel laureate Joseph Stiglitz, and even Bill Gates. There
are, of course, differences of nuance in the positions of these people,
but the thrust of their perspectives is the same: to bring about a
reformed social order and a reinvigorated ideological consensus for
global capitalism.

Among the
key propositions advanced by partisans of GSD are the following:
Globalization is essentially beneficial for the world; the neoliberals
have simply botched the job of managing it and selling it to the public;
It is urgent to save globalization from the neoliberals because globalization
is reversible and may, in fact, already be in the process of being
reversed;
Growth and equity may come into conflict, in which case one must prioritize
equity;
Free trade may not, in fact, be beneficial in the long run and may
leave the majority poor, so it is important for trade arrangements
to be subject to social and environmental conditions;
Unilateralism must be avoided while fundamental reform of the multilateral
institutions and agreements must be undertaken – a process that
might involve dumping or neutralizing some of them, like the WTO’s
Trade-Related Intellectual Property Rights Agreement (TRIPs);
Global social integration, or reducing inequalities both within and
across countries, must accompany global market integration;
The global debt of developing countries must be cancelled or radically
reduced, so the resulting savings can be used to stimulate the local
economy, thus contributing to global reflation;
Poverty and environmental degradation are so severe that a massive
aid program or “Marshall Plan” from the North to the South
must be mounted within the framework of the “Millennium Development
Goals”;
A “Second Green Revolution” must be put into motion, especially
in Africa, through the widespread adoption of genetically engineered
seeds.
Huge investments must be devoted to push the global economy along
more environmentally sustainable paths, with government taking a leading
role (“Green Keynesianism” or “Green Capitalism”);
Military action to solve problems must be deemphasized in favor of
diplomacy and “soft power,” although humanitarian military
intervention in situations involving genocide must be undertaken.
The Limits of Global Social Democracy

Global
Social Democracy has not received much critical attention, perhaps
because many progressives are still fighting the last war, that is,
against neoliberalism. A critique is urgent, and not only because
GSD is neoliberalism’s most likely successor. More important,
although GSD has some positive elements, it has, like the old Social
Democratic Keynesian paradigm, a number of problematic features.

A critique
might begin by highlighting problems with four central elements in
the GSD perspective.

First,
GSD shares neoliberalism’s bias for globalization, differentiating
itself mainly by promising to promote globalization better than the
neoliberals. This amounts to saying, however, that simply by adding
the dimension of “global social integration,” an inherently
socially and ecologically destructive and disruptive process can be
made palatable and acceptable. GSD assumes that people really want
to be part of a functionally integrated global economy where the barriers
between the national and the international have disappeared. But would
they not in fact prefer to be part of economies that are subject to
local control and are buffered from the vagaries of the international
economy? Indeed, today’s swift downward trajectory of interconnected
economies underscores the validity of one of anti-globalization movement’s
key criticisms of the globalization process..

Second,
GSD shares neoliberalism’s preference for the market as the
principal mechanism for production, distribution, and consumption,
differentiating itself mainly by advocating state action to address
market failures. The kind of globalization the world needs, according
to Jeffrey Sachs in The End of Poverty, would entail “harnessing…the
remarkable power of trade and investment while acknowledging and addressing
limitations through compensatory collective action.” This is
very different from saying that the citizenry and civil society must
make the key economic decisions and the market, like the state bureaucracy,
is only one mechanism of implementation of democratic decision-making.

Third,
GSD is a technocratic project, with experts hatching and pushing reforms
on society from above, instead of being a participatory project where
initiatives percolate from the ground up.

Fourth,
GSD, while critical of neoliberalism, accepts the framework of monopoly
capitalism, which rests fundamentally on deriving profit from the
exploitative extraction of surplus value from labor, is driven from
crisis to crisis by inherent tendencies toward overproduction, and
tends to push the environment to its limits in its search for profitability.
Like traditional Keynesianism in the national arena, GSD seeks in
the global arena a new class compromise that is accompanied by new
methods to contain or minimize capitalism’s tendency toward
crisis. Just as the old Social Democracy and the New Deal stabilized
national capitalism, the historical function of Global Social Democracy
is to iron out the contradictions of contemporary global capitalism
and to relegitimize it after the crisis and chaos left by neoliberalism.
GSD is, at root, about social management.

Obama has
a talent for rhetorically bridging different political discourses.
He is also a “blank slate” when it comes to economics.
Like FDR, he is not bound to the formulas of the ancien regime. He
is a pragmatist whose key criterion is success at social management.
As such, he is uniquely positioned to lead this ambitious reformist
enterprise.
Reveille for Progressives

While progressives
were engaged in full-scale war against neoliberalism, reformist thinking
was percolating in critical establishment circles. This thinking is
now about to become policy, and progressives must work double time
to engage it. It is not just a matter of moving from criticism to
prescription. The challenge is to overcome the limits to the progressive
political imagination imposed by the aggressiveness of the neoliberal
challenge in the 1980s combined with the collapse of the bureaucratic
socialist regimes in the early 1990s. Progressives should boldly aspire
once again to paradigms of social organization that unabashedly aim
for equality and participatory democratic control of both the national
economy and the global economy as prerequisites for collective and
individual liberation.

Like the
old post-war Keynesian regime, Global Social Democracy is about social
management. In contrast, the progressive perspective is about social
liberation.

Walden
Bello is a columnist for Foreign Policy In Focus, a senior
analyst at the Bangkok-based Focus on the Global South, president
of the Freedom from Debt Coalition, and a professor of sociology at
the University of the Philippines.